By the OGJ Online Staff
HOUSTON, May 30 -- California Gov. Gray Davis Tuesday praised President George W. Bush's directive to investigate high natural gas prices in the state, but confirmed they remained far apart on the "big enchilada" of temporary electricity price relief.
Earlier in the day, Bush reiterated his opposition to the price caps which Davis insisted are necessary to keep prices "just and reasonable" until new power plants are built in the state.
Davis said Bush agreed to send Pat Wood, his new appointee to the Federal Energy Regulatory Commission and former chairman of the Texas Public Utility Commission, to California to determine why gas is selling in California for nearly three times what it sells for elsewhere.
Wood will look into charges of market manipulation and review the wisdom of a FERC decision 2 years ago to suspend a tariff that controlled gas transportation prices, Davis said.
"The good news is that the president is distressed to learn that the price of natural gas, Texas natural gas, in New York is roughly $5, while it's running $14 to $15 out here," Davis said during a press conference. "He is deeply concerned if there's any market manipulation that created that result. Even if there isn't, he is open to reviewing the wisdom of FERC's action 2 years ago when they suspended a tariff that controlled the transportation element of natural gas."
The California Democrat said the state projects spending $50 billion for electricity this year, up from $27 billion last year, even though demand has dropped 8-10% in the first 5 months of 2001. He said high power prices could tip California into a recession, which could drag down the American economy into recession as well.
"That is not good for any American," Davis said. "It's not good for President Bush."
Davis said he will continue to pursue "every recourse" available, including possibly suing FERC for failing to discharge its legal obligations to control prices after the state exhausts the administrative process. Secondly, Davis said he is looking forward to working with the "newly constituted" US Senate to make sure the problems of California and the West, and conceivably New York City get a full airing.
Last week the balance of power in the Senate shifted to the Democrats after Sen. James Jeffords (R-Vt.) said he was leaving the Republican party to become an independent. Both California senators have been strong advocates of price caps.
Davis said he also told Bush of his displeasure with California generators and the fact "there's 14-15,000 Mw down for repairs when last year there were 3,000 Mw down for repairs." The governor reiterated his expectation all plants will be running by summer.
"I expect their full cooperation and that their fate is in their hands," he said. "If they do not cooperate I'll have no choice but to sign a windfall profits tax or seize plants. I just recounted that conversation with the president."
